Arboretum Silverleaf Income Fund LP v. Katofsky
- James Oetken
- 1:22-cv-07522
- U.S. District Court · Southern District of New York
- 2
In Arboretum Silverleaf Income Fund LP v. Katofsky, Judge Oetken ordered plaintiffs to address inadequate diversity allegations or face possible dismissal.
Arboretum Silverleaf Income Fund LP was required to address the court’s concern about diversity jurisdiction or seek to amend its complaint. ACF Credit Program LLC, Jeff Katofsky, and The SKG Family Trust were affected by the potential jurisdictional dismissal, but the order did not decide the underlying dispute.
What happened
Arboretum Silverleaf Income Fund LP and ACF Credit Program LLC sued Jeff Katofsky and The SKG Family Trust in federal court, relying on diversity jurisdiction. The complaint identified the plaintiffs as Delaware entities and alleged that the defendants were connected to California.
The court said those allegations did not adequately establish federal subject-matter jurisdiction. An LP’s citizenship depends on the citizenship of all its general and limited partners, not merely its place of registration or principal place of business. Arboretum therefore had to identify its partners or at least confirm that none was a California citizen.
Judge James Oetken ordered Arboretum, by September 23, 2022, either to explain why the complaint should not be dismissed for lack of jurisdiction or to seek permission to file an amended complaint properly alleging jurisdiction. The court did not dismiss the action in this order.
The detailed version
- Arboretum Silverleaf Income Fund LP v. Katofsky · No. 1:22-cv-07522
- James Oetken
- Sept. 9, 2022
Background
Arboretum Silverleaf Income Fund LP and ACF Credit Program LLC sued Jeff Katofsky and The SKG Family Trust. The plaintiffs invoked diversity jurisdiction under 28 U.S.C. § 1332, which permits a federal court to hear certain disputes between citizens of different states.
The complaint described Arboretum as a Delaware partnership and ACF Credit Program as a Delaware limited liability company. It stated that ACF Credit Program had no members residing in California. The complaint alleged that Katofsky resided in California and that The SKG Family Trust was a California trust.
Court’s Analysis
The court explained that federal courts have limited jurisdiction and must dismiss an action if subject-matter jurisdiction is lacking. For diversity purposes, an LP has the citizenship of each of its general and limited partners. Its place of registration and principal place of business do not establish its citizenship for this purpose.
The court therefore found the complaint’s jurisdictional allegations insufficient. To establish diversity jurisdiction, Arboretum had to allege that the citizenship of each general and limited partner differed from the citizenship of the defendants. The court stated that Arboretum had to identify all of its partners or, at minimum, confirm that none was a California citizen.
Order and Disposition
The court ordered Arboretum, on or before September 23, 2022, to do one of two things: show why the complaint should not be dismissed for lack of subject-matter jurisdiction, or move to file an amended complaint that properly pleads jurisdiction. The order warned that the action may be dismissed if Arboretum failed to comply. The opinion does not state that the action was dismissed in this order.
Judge James Oetken issued the order on September 9, 2022.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.